Lines defend competition exemption application - as shippers slam ‘collusion’ implications

Alan Peat
THERE’S BEEN an explosion of objections from South African shippers following the announcement that the Association of Shipping Lines (ASL) has applied to the Competition Commission (CC) for anti-trust exemptions for conferences and consortia of lines.
But, answered the lines, it is no more than an appeal to legalise the status quo and for SA to follow the other major shipping jurisdictions in their anti-trust exemptions.
“Can you imagine what would happen in SA if lines were not allowed to discuss scheduling of ships, for example,” said Tony Norton, legal adviser to the ASL.
“In terms of the Competitions Act, the lines can’t even do that, and the fear is that bunching could very easily occur and shippers could be seriously inconvenienced by widely spaced shipping schedules.”
According to information released to FTW, the ASL has applied to the Competition Commission to allow members, and other parties in a number of different groupings, to agree:
l Common freight rates and common terms and conditions;
l Frequency and allocation of sailings and capacity management;
l Common approach to membership of associations;
l Arrangements regarding different sections of the trade;
l Tying or loyalty arrangements with customers;
l A common approach to surcharges implemented for unforeseen circumstances;
l Pooling of cargo;
l Pooling of revenue, and
l Pooling of resources.
“The association is asking for the same position as conferences and consortia have in other jurisdictions around the world,” said Norton. “No more, no less.”
In the initial approach, the CC refused to give a ruling.
“It was a technical quibble between the ASL and the commission about whether the commission had the right to make this law,” Norton added.
But the Competition Appeal Court agreed with the ASL plea and the appeal court judges effectively found that the commission had to give the ASL a ruling.
But the ASL application has been met with a firestorm from SA shippers who feel that an anti-trust exemption ruling by the commission would effectively allow lines to fix prices on an agreement basis.
“It is extremely serious,” said Nolene Lossau, executive director of the SA Shippers Council (SASC).
“It would have major implications for all cargo owners as it would basically give all the lines the permission to collude on all aspects of seafreight and landside charges - regardless of their affiliation to conferences.”
“Worse than that,” Lossau told FTW, “it would also allow the various conferences to collude with each other.”
“The exemption would apply to all members of ASL and not just the container lines so it could be feasible for the parcel and bulk operators to start colluding if this exemption is granted.”
In response, the SASC has requested that all cargo owners take action - as and when the commission posts the notice in the Government Gazette.
“In the interim it was agreed that all members of the shippers’ council ought to get their legal departments to start preparing a response on this matter.”
But, according to Norton, the whole matter should be dealt with on “an amicable” basis.
“The ASL has effectively put down everything that has been granted in other jurisdictions and it will be negotiated with the commission what is permissible in this jurisdiction.
“Those who object will also have a voice before the commission.”
According to information from the commission, the next step is for ASL to submit a bond of R100 000 for this application.
The commission will then place a notice in the Government Gazette and interested parties will have 20-days to respond to this application.